National suuply's shareholders' equity included the following accounts at December 31, 2010:
Shareholders' Equity in Millions
Common stock, 6 million shares at $1 par 6,000,000
Paid-in capital-excess of par 30,000,000
Retained Earnings 86,500,000
Required:
1. National Supply reacquired shares of its common stock in two separate transactions and later sold shares. Preapre the entries for each of the transactions under each of the two separate assumptions: the shares are (a) retired and (b) accounted for as treasury stock.
Feb. 15, 2011 Reacquired 300,000 shares at $8 per share
Feb. 17, 2011 Reacquired 300,000 shares at $5.50 per share
Nov. 9, 2011 Sold 200,000 shares at $7 per share (assume FIFO cost)
2. Prepares the shareholders' equity section of National Supply's balance sheet at December 31, 2013, assuming the shares are (a) retired and (b) accounted for as treasury stock. Net income was $14 million in 2011, $15 million in 2012, and $16 milion in 2013. No dividends were paid during the three year period.